Wednesday, April 8, 2009

On the informal economy

In a recent guest blog post over at Travelojos in which I talk about the contrast between formal and informal morality in Chile, I mentioned that there are two economies here, the formal and informal.

The formal economy is just what you'd expect. People busting their humps, with the longest work week, of 48 hours and allegedly some of the lowest productivity in the Americas. Workers leave the house at 6, 7, or if they are lucky 8, and arrive home nearly never before 7, often not until 9. For this, once a month, people who work here will get their liquidación de sueldo (like a pay stub), or less commonly, a check to cash. The minimum monthly wage in Chile from July 1, 2008 to June 30th, 2009 is 159,000 pesos, or about US $300. This article in the Bolivian newspaper El Diario, refers to the Univ. of Belgrano study, which compares the minimum wages of several nearby countries and finds that Argentina is in first place, with $310, then Chile, $266. Paraguay marks $216, Colombia $197, Brazil $176, Ecuador $170, Peru $150, Uruguay $129 and Bolivia $63.

No matter where you live, the minimum wage is just not a whole lot to live on. You probably struggle with necessities, like your kids' education, electricity bills, buying and cooking nutritious food and transportation costs. My repeating monthly bills, which are housing, gastos comunes (apt. maintenance that renters pay), electricity, gas, internet, cellphone, health insurance and a gym membership, dwarf the minimum wage. And I do not have a car, or a television, or cable, or take public transportation practically ever (I ride my bike everywhere), or have children to send to school, or eat meat or do a host of other things that "normal" humans might consider essential.

If I do the math, there are ways I probably could live on minimum wage. I'd drop my cellphone plan, my gym membership, possibly my health insurance. I could also take in a lodger into my one-bedroom apartment. With two out of the three of those things, I could just barely live on minimum wage. I'd be eating a lot of potatoes, and forget about those pesky things like going to the doctor when sick or the dentist, ever. And if it was your birthday I'd bring you some beads I'd strung myself (not a bad gift, actually).

So what do people do? Here in Santiago, people double and triple-up in pretty small spaces, live in neighborhoods that are not winning any Good Housekeeping awards. They eat at home, or load up on the free lunch at work (or in the nearby eateries that accept the sodhexo pass, a lunch coupon which some employees get), and they use consumer credit which will take them a lifetime to pay off.

They also supplement their work. People who work in the formal economy, and those who are outside of it have invented a million and one ways to make cash when money is tight, or economize on what they have to pay for. Not just minimum wage earners. People who are out of work, and even people who make fairly decent money, but for whom a few extra pesos would round out the month nicely.

Transportation: On the old bus system (where we paid cash), young people would get on the bus with their arms in a creepy heil-hitler salute, saying "me llevas a doscientos?" (Can I ride for (esssentially) half-price? With the new system this doesn't work, and so people sometimes pry open the back doors of the bus and hop on for free, or just don't scan their BIP card on the way in. Money saver. People also walk distances rather than taking transportation if possible. Bicycle use is on the rise as well.

Food: Rather than eating dinner, people will stop off and eat a couple of sopaipillas, fried disks of dough bought on the street for 100 pesos (less than a quarter), spread with mustard and ketchup and scarfed down. Nutritious? Absolutely not. But cheap.

Recycling: Cartoneros swoop around the city, looking for paper and cardboard to bundle up and sell by weight. People also dig through the trash and pick up cans, always followed by a resounding crunch as they flatten the can for easier storage and transport. Last I looked, the price for aluminum was 300 pesos a kilo. Do you know how many cans that is? Still, it's something.

Selling stuff: This is where the informal economy really takes off. At the place I used to work, where salaries were far above minimum wage, it was fairly common for someone to bring in a loaf of banana bread, and sell it by the slice. Or a box of cuchuflies (rolled wafers filled with cream caramel, sometimes dipped in chocolate) that they'd bought, to sell for a profit. At Christmas people came around with boxes of cookies or pan de pascua (a cross between pannetone and fruitcake), all for sale.

On the street, there are people selling bandaids (100 pesos a strip), fruits and vegetables in bags (prices and selection vary, depending on the season), and the shoeshine men, who always have signs up saying "llegó la grasa de caballo" (horsegrease arrived!). They perhaps are not actually informal in that they have permission from the city to be there, but I'm guessing they don't make minimum wage.

Candied peanut stands are popular, and you'll often find people with baskets of the same hopping on and off busses or wandering the street offering them for sale. At big events you'll see people selling cubos (ices) or sandwiches, like the "vegetarian hamburger" I bought last night for 500 pesos after the monthly critical mass ride. It was delicious. Garlicky. I know people who make bath salts, herbal remedies, natural cosmetics, marzipan, jam and a million other things for sale on the street, or among friends. And I know several people who run bikeshops out of their homes, with a space in the garage or in the back yard where they have a stool you can sit on while you wait and make idle chitchat with their mom, girlfriend, daughter, etc.

And last night, as we were sitting out in Bellavista (which I mention in this article as well), a guy came up selling flowers he'd made from palm leaves, presumably leftovers from Palm Sunday (domingo de ramos), which he'd had lying around after street sales of palms didn't exhuast his supply. And before you deride the workmanship of something you can buy on the street for 200 pesos, I want you to take a look at the level of detail involved, the precision.

In another world this guy would be a reknowned artisan. Here he's just another guy who sells stuff on the street to make some money for the family. Thanks guy. You do beautiful work.

Hi Eileen - I love your blog! And that photo is wonderful. I spent just one month in Santiago around 12 years ago, part of a one year trip researching Latin American cinema for my Masters degree. Thanks for taking me back! I'll add you to my blogroll, and will definitely return. x

thanks all for your comments, and Richard and Lara especially for your unbridled enthusiasm, which is really the most any writer could ever ask for. I'm a visitor to both of your corners of the web as well. Smiles all around.